- JPY rates weaker as Nikkei spikes
- 5-10y bid; 10y underperforms
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JPY rates weaker as Nikkei spikes
After six consecutive days of gains, the JPY rates market was weaker today amid a lift in risk appetite following the rally in US equities in overnight trading. Profit-taking has also been part of the reasons for a selloff in JPY rates.
The Nikkei 225 Index was up by 1.77% after lunch break, dampening demand for JPY rates. JGB future was down by close to 40-ticks in the afternoon session before trimming losses to mark 26-ticks lower at 147.37 in mid-afternoon Tokyo trading. The yield on the benchmark 10-year JGB was 2bps higher at 0.403%.
5-10y bid; 10y underperforms
Losses in the cash bond market have prompted paying in the 5- to 10-year area of the swap curve.
A dealer reported bid-side flow in 10-year since market open. It traded 2-3bps higher in the morning session, and paying intensified after lunch break and it traded up to 8bps higher. It was last seen changing hands 4.5bps higher of 0.79%.
7-year traded in a tight range around 0.5775% in the morning session, or 2.75bps higher than previous close. 5-year traded mostly around 0.4% in the morning before traded up to 5.5bps higher of 0.44% after lunch break. The belly was marked around 2-3bps higher at time of writing.
10-year has been slightly underperforming other maturities on the selloff. 5s/10s swaps therefore steepened up by 2.5bps to 38.5bps while 10s/20s swaps were 4bps flatter at 43bps.